Micronet Enertec Technologies, Inc. Reports 17% Increase in Second Quarter 2016 Revenues

MONTVALE, N.J., Aug. 11, 2016

David Lucatz, Chief Executive Officer of Micronet Enertec Technologies, Inc. stated, "During the second quarter, we continued to see increased interest in our All-In-One products related to the Federal Electronic Logging Device Mandate (The ELD Mandate) that requires fleet operators to electronically track drivers' hours of service.  The mandate impacts a potential market of 2.6 million trucks which will be required to install Electronic Logging Devices.  Our onboard, Android-powered solutions are an excellent match for all fleet types and sizes and in addition to driving revenue growth, backlog in our MRM division has doubled since the second quarter of 2015.  Specifically, we're seeing increased demand for our rugged TREQ®317 platform, which in addition to meeting ELD mandate compliance, is also a powerful computing device with full connectivity and an easily adaptable solution.  The development of innovative products remains our priority as we focus on broadening our offerings penetrate new segments while growing our solid reputation and position in the MRM industry.

"We also achieved increased backlog and pipeline growth in our Aerospace and Defense business in the quarter, related in part to follow on orders for our Command and Control defense systems. As we've stated previously, we expect additional repeat orders for our proven products and systems to contribute to our future growth and profitability.  Our reputation as a provider of reliable and very sophisticated solutions for critical defense systems is driving market interest in our solutions and is a competitive strength as we move forward."

Second Quarter 2016 Review

• Total revenue increased 17% to $6.7 million for the first quarter of 2016, as compared to $5.7 million in the second quarter of 2015.  Sequentially, revenues grew 3% compared to first quarter 2016.  
• Gross profit margin was 23%, as compared to 32% in the second quarter of 2015. The decrease was mainly due to write off of slow moving inventory following a shift in product mix towards new products.
• Research and development (R&D) expense for the second quarter of 2016 was flat on a dollar basis at $0.7 million, but declined to 10% of sales, compared to 13% of sales, in the second quarter of 2015.  
• Selling, general and administrative (SG&A) expense increased to $2.0 million, or 30% of sales, as compared to $1.5 million, or 26% of sales, in the second quarter of 2015.  SG&A includes a $250 thousands provision related to lawsuit.    
• Net loss attributed to MICT for the second quarter of 2016 was $1.2 million, or $0.21 per basic share, as compared to a net loss of $0.6 million, or $0.10 per basic share, for the second quarter of 2015.   
• Non-GAAP net loss for the second quarter was $1 million or ($0.16) per basic, as compared to $0.3 million, or ($0.05) per basic share, for the second quarter of 2015. A reconciliation of GAAP to non-GAAP net loss and loss per share is provided in the table at the end of this press release.
• At June 30, 2016, the Company reported cash, restricted cash and marketable securities totaling $11.5 million and working capital of $11.7 million.

First Six Months 2016 Review

• Total revenue increased 16% to $13.2 million for the first half of 2016, as compared to $11.4 million in the same period of 2015. 
• Gross profit margin was 28% as compared to 31% in the first six months of 2015. The decrease was mainly due to write off of slow moving inventory following a shift in product mix towards new products.
• Research and development (R&D) expense for the first half of 2016 was $1.4 million, or 10% of sales, compared to $1.5 million, or 13% of sales in the same prior year period.  
• Selling, general and administrative (SG&A) expense increased by $0.4 million to $3.5 million, or 26% of sales, as compared to $3.1 million, or 27% of sales, in 2015.  The increase is mainly due to $250 thousands provision related to lawsuit.   
• Net loss attributed to MICT for the first six months of 2016 was $1.6 million, or a loss of $0.27 per basic share, as compared to a net loss of $1.3 million, or a loss of $0.22 per basic share in the first six months of 2015. 
• Non-GAAP net loss for the first six months of 2016  was $1.1 million or ($0.18) per basic, as compared to $0.8 million, or ($0.13) per basic and diluted share, for the first six months of 2015. A reconciliation of GAAP to non-GAAP net loss and loss per share is provided in the table at the end of this press release.

Recent Developments

During the second quarter, the Company announced that its wholly owned subsidiary, Enertec Systems, was awarded a three stage $5.8 million project for the production of computer-based Defense Command and Control systems for a multi-billion Israeli-based Defense and Aerospace contractor. An order totaling $3.4 million for the first stage of the project has already been received.  The Company expects to receive additional orders toward the end of 2016.